Canberra reaps $360m from inactive bank accounts

By Esther Han and Inga Ting

June 10, 2014 — 3.00am

The federal government has bagged an unprecedented $360 million from household bank accounts since a controversial change to unclaimed money laws, Australian Securities and Investments Commission figures show.

Pensioners and others saving for a rainy day have reported trying to access their savings only to discover their money had been seized by the government because it had been dormant for three years or more.

Canberra has collected more money from inactive bank accounts under the three-year rule than the total amount captured in the past five decades combined.

Nearly $360 million from 80,000 accounts was funnelled into government coffers in the year to May after Labor lowered the threshold, eclipsing the $330 million netted between 1959 and 2012, during which time idle accounts could be touched only after seven years.

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Illustration: Matt Golding.

The Treasury now looks poised to lengthen the threshold to five years in the face of fierce lobbying from the banking industry.

The money goes into the government's consolidated funds, but can be reclaimed at any time, by providing proof of identity to the bank, which reclaims the money via ASIC. The time taken for a return can be up to two months.

Australian Bankers Association chief executive Steven Munchenberg said the legislation was a ''rushed'' budget-boosting exercise that angered customers whose accounts were not lost or forgotten.

Consumer group Choice said it supported the three-year provision because high bank fees could ''eat away'' at inactive accounts.

ASIC said the chief purpose of the laws was to reunite people with lost accounts before funds were eroded by fees, charges and inflation. ''Australians have recovered over $470 million since 2009,'' an ASIC spokesman said. ''We hold the records … and we make them publicly available for anyone to search any time on our MoneySmart website.''

Connie Franze, 68, and her disabled son, Vince, 45, are trying to reclaim their life savings of more than $12,000 that was taken by the government last June.

''I saved for 45 years … It was my carer's pension and his disability pension,'' said the Sydney retiree.

She opened the Commonwealth Bank account 45 years ago, squirrelling away a small portion of her $50-a-week earnings from growing plants. The pair were saving for a trip to Italy to visit her mother.

''She was 100 years old. I wanted to take money out. They wouldn't give me the money … [and then] my mother died this year. The last time I saw her was 20 years ago.''